With the over arching trend of corporate disclosure being transparency, the pressures and risk of creating and distributing disclosure continue to increase. In addition to the financial disclosures, the majority of corporate disclosure occurs in non-financial form. These include commmunications such as press releases, corporate reports, presentations and web site content. The information disclosed through these channels is critical to providing the context and insight into the operations and results of your company. Not surprisingly, all of this information represents significant strategic value to your company while also representing significant risk should information be disclosed inaccurately or in a selective (non-RegFD) manner.
Sarbanes-Oxley (SOX) brings an expanded requirement that was put in place to ensure that all potential material facts have been presented and reviewed with senior officers of the company, prior to disclosure. Known as the Certification of Disclosure Controls and Procedures, this aspect of SOX has been a challenging one for many issuers as most have focused the majority of their efforts in ensuring compliance with internal controls over financial reporting or ICOFR. That is, ensuring that all internal controls are in place to guarantee the accuracy and completeness of accounting records and financial reporting.
The second component of controls and procedures focuses on Disclosure Controls and Procedures (DC&Ps). The challenge with DC&Ps are that they are typically very manual and are often based on using a variety of applications (such as Email and Word) to distribute versions of documents and then approvals are handled either through email, in person, by fax or over the phone.
Although this scenario may work to some degree, it has many points of pain. It is labor intensive and unweildy when managing multiple participants. It’s unsecure, when distributing sensitive information via email, and it doesn’t generate an easy to reference audit trail that can be reported on – meaning any regulatory or legal enquiry will result in significant expense in electronic discovery costs along with significant time requirements of key executives, officers and possibly directors. And finally, the approach described above provides a very limited view on how the controls and procedures are accurately being executed vs. how they were designed, meaning that companies may not have the information they need to properly certify their DC&Ps at the end of each quarter.
To address these pain points we (here are Q4) have been working with IROs, CFOs, Corporate Secretaries and Risk Managers on evolving our suite of products to help increase efficiency and reduce the risk of drafting, approving and distributing corporate disclosure.
Issuers who use Q4 solutions, experience significant increases in efficiency - corporate disclosure is created faster and with no problems related to version control or tracking of reviewers and approvers. Less overlap exists between team members’ comments and edits. Managers have better insight into the process (and making improvements). Risk managers are able to truly analyze DC&Ps in a real environment – rather than simply testing designs, they are able to accurately measure the effectiveness of controls and procedures and make appropriate changes to achieve improvements. And importantly, documented proof of due dilligence exists to demonstrate the steps taken in making decisions concerning material information.
Screenshot of Q4 Press when working with multiple documents
To learn more, view the Q4 Press highlight screencast on the Q4 Community. It’s about 10 minutes in length but provides a great overview on all of the key features.
Technorati Tags: Bill 198, Sarbanes Oxley, MI 52-109, CEO and CFO Certification, SOX 302, SOX 404, Risk Management, Compliance, Disclosure controls, Disclosure, SEC, OSC
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